Premature commitment bias

I’ve had the pleasure to be part of several startup ventures and advise on several others. The one thing I think nobody really talks about is the bias that entrepreneurs here in the Silicon Valley have to prematurely commit to an idea or company. Something I call ‘premature commitment bias’.

The typical startup scenario I’ve seen around the Valley is:

  • You have an idea. You might get some friends excited about that idea and maybe one of them becomes your co-founder.
  • You and your co-founder start to get so excited you just can’t help yourself. You build a prototype, try out some designs, develop a business plan and start talking to investors.
  • Maybe you get lucky and an investor cuts you a $1,000,000 check. You feel fully committed to the idea and the solution you pitched to your investor and get down to investing a great deal of time and effort to it.
  • Cognitive dissonance kicks in. 3 months in, you find out after doing some market research (if you’re like most Silicon Valley startups, you didn’t do too much of that beforehand) that nobody really gives a hoot about your product. So what do you do now ?

Most entrepreneurs in this position think:

“We raised a million, so we’re going to do this, no matter what.”

They end up burning through all the money after spending months and months of blood, sweat and tears building a business that’s not going to work. If they’re lucky, they might get a second round venture capital, but that’s not very likely.

They don’t have the option to cash in their chips and return the money to their investors. In reality they could – but psychologically, they don’t allow themselves to think that way.

How Silicon Valley encourages this bias

Silicon Valley is structured such that it promotes the kind of culture where you feel like you have to finish the business you started, even though that business may no longer make sense.

I’ve always felt that entrepreneurship needs to be based on learning. As I look around at Silicon Valley startups and culture, it’s not built around learning.

The culture here doesn’t promote learning because you’re pitching a business where in theory, you know the absolute least about it. You know about the problem and solution but you haven’t yet validated the market to see if anyone really cares about the solution or that they’re willing to pay for the solution you came up with.

I’d estimate that 80% of the engineers in Silicon Valley are wasting their time: they’re building something that probably nobody cares about.

I have a crush on you

I liken the problem of premature commitment bias to having a crush on somebody.

When I think about crushes I had on girls in high school – I’d build up a romantic idea in my head, “Gee, this person is really nice, I really like her”, all without validating if she liked me back. The problem is, when you find out she doesn’t, it changes your perspective on things in a hurry.

Just like you want to have a crush on a girl who has a crush on you, you want to build a business that likes you back – where people care about the solution you have to offer.

So how do you overcome it?

I really don’t have an answer for overcoming premature commitment bias yet. I’m not really sure what the solution is. Some people are doing interesting things like Eric Ries and the maturation of his lean startup methodology which has come about from lessons learned. These are steps in the right direction, but I don’t think they’re really addressing this issue.

What are your thoughts?

1 Response

  • Anonymous // // Reply

    This is the SAME problem in non-profits, though in NGOs the problem is bigger as they usually DO get the second round of funding. By and large, granting agencies require a plan before a grant is awarded, and then you are compensated or further supported by executing your PLAN, not achieving you impacts. It’s the exact same problem you are describing, but in Silicon Valley, people want a return on their investment, so they might not fund you again if they see they aren’t getting that. With NGOs, people make huge investments and then are often never able to close the feedback loop and really understand the impact of their work. Instead, they know THEY feel good, and that the NGO’s donor relations team seems to feel good about it, so why not donate again!  Imagine if those 80% of SV start-ups your are talking about were able to be funded for their failing ideas for perpetuity. That is what we face here in the NGO world!  (Start on slide 24 of this presentation I gave relating to this – )

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